What is the definition of interest in the context of the Truth in Savings Act?

In the context of the Truth in Savings Act, interest is defined as a payment for the use of a consumer's funds. This concept illustrates the relationship between a financial institution and its customers: when consumers deposit money into their accounts, they are effectively lending those funds to the bank. In return for the use of these funds, the bank pays interest to the consumer. This interest compensates the consumer for allowing the bank to utilize their money typically for lending purposes or investments, which is an essential feature of savings accounts and other deposit products.

Other options presented, such as bonuses for opening accounts, fees announced by the bank, or absorption of expenses, do not accurately reflect the fundamental nature of interest. Bonuses and fees are distinct from interest, as they pertain to account promotions or costs incurred by account services, rather than compensation for the use of deposited funds. Understanding this definition helps consumers recognize how their funds generate earnings in a savings account context.